With proliferation of the Internet, online shopping has become one of the major avenues of commerce. Consumers and businesses are purchasing goods from online vendors more frequently than ever, and the number of transactions and sales revenue are projected to grow year-over-year at a staggering rate. As the scope and volume of e-commerce continue to grow, both a number of different products available online and an average number of purchases made in a given period are growing exponentially. It has thus become very important to keep inventory of the products and to keep items in stock even through fluctuating demands.
Fundamentally, keeping products in stock involves predicting future demand, checking current inventory level, determining a right quantity to order, and placing orders for an additional quantity or manufacturing the same. Many prior art systems have automated this process of placing orders for the additional quantity. However, determining the right quantity involves a delicate balance of maintaining enough inventory to meet future demand while keeping the inventory to a minimum to prevent surplus or unnecessary storage fee. For example, not ordering enough products in advance runs the risk of going out of stock, which directly translates to lost revenue. On the other hand, ordering too many can result in an overstock, which may incur maintenance fee and occupy a space that can be dedicated to other more lucrative products. Lead times or shipping times that suppliers require also further complicate the process of ordering new products in response to sudden increases in demand.
Ordering more products is also limited by a processing capacity of a receiving end. The receiving end, a store itself or a warehouse for example, has a limit on how many products it can receive and stock into its inventory for sale in a given period of time. The store may order however many number of products it needs in order to meet demand, but it will not be able to sell them if the incoming quantity exceeds its inbound processing capacity. Thus, the process of determining the right quantities requires a constant monitoring of product inventory and adjustment of various parameters through a feed forward loop that adjusts the parameters for future orders based on trends and performances in the past.
Therefore, there is a need for improved methods and systems for keeping product inventory at an optimum level by intelligently adjusting inbound purchase orders to determine the right quantity of products to order.